Since any AM stereo broadcast signal must be a compatible signal, i.e., provide undistorted monophonic or L+R reception by monophonic receivers, an ideal system would have only sum or monophonic information on the envelope, but would provide sufficient information for accurate stereo reproduction in stereo receivers. This has been done in a system disclosed in a co-pending application, Ser. No. 674,703, assigned to the same assignee as is the present invention. In this system, a carrier is modulated in quadrature with information corresponding to the sum and difference of left and right information. After modulation, the carrier is limited to eliminate amplitude variation, but retain the quadrature phase information. The carrier is then amplitude modulated by the sum or monophonic signal in a power amplifier stage and broadcast in the form 1+(L+R) cos (.omega..sub.c t+.phi.) where .phi. is arc tan [(L-R)/(1+L+R)]. In a monophonic receiver, the L+R information can easily be recovered by an envelope detector but for undistorted stereo, a division by cos .phi. is needed in a stereo receiver. Depending on receiver design, cos .phi. division may be done once or twice and in any of a number of points in the receiver circuit. However, if the angle .phi. becomes very large, the cosine becomes very small and division by the cosine factor causes the gain in the corrected channel to increase rapidly; e.g., when .phi. goes from 75.degree. to 85.degree., the unlimited gain would almost triple (1/cos .phi. going from 3.9 to 11.5). Thus, at very large values of .phi., it is advisable to allow a small amount of distortion in order to prevent a large decrease in S/N ratio.